Citing security reasons, the People’s Bank of China had in March this year halted the use of quick response (QR) codes to handle online payments. The central bank’s order came as a shock to Alibaba and Tencent, the biggest developers of the QR codes systems. Alibaba runs the third-party payment system Alipay, while Tencent lets users pay through its popular instant messaging app Weixin.
But while Alibaba and Tencent are waiting for permission to resume QR codes-based payments, rival UnionPay, which counts the big four state-owned banks as major shareholders, has quietly built up its own QR code payment capacity, according to Huxiu.com.
Huxiu reports that UnionPay is done with system development and is talking with banks on promotion of the new payment system. Plans are said to have been submitted to the central bank to start the new service.
While the PBoC had a strong point in suspending QR code payments to resolve the security issue, and perhaps more importantly finalize the industry technical standard so that different QR platforms are able to talk to each other, some also suspect that the halt is aimed at giving time to UnionPay to catch up.
Charges on QR code payments are generally much lower, potentially posing a strong threat to the traditional business of UnionPay.
The most likely scenario is for PBoC to give the green light for QR code payments when UnionPay is ready too.
That way, even if Union Pay’s internet technology trails that of Alibaba and Tencent, it can launch QR code payment service at the same time as the two internet giants, putting it in a stronger position o defend its market share given its huge hold in the offline POS market.
A clear industry standard also means merchants do not have to install one QR code machine for each payment service provider.
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